Simplified facts and practical information about home loans in a simple language while avoiding the technical jargon associated with it! I was confused with Finance in Home Loans and this Blog is an simple expression! I am a Healing Artist, and not attached with any Financial Commercial Institution and am not responsible for any financial links posted Take care and surf information before committing!
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29 September 2013
What are Interest Only Home Loans – Simplified Facts on Interest Only Home Loans
interest only home loans. ‘Interest only
home loans’ means that the borrower ends up paying only the interest for some
years and then the principle amount is added later for years.
This has risen as
a better option for many who are not in position to pay large amounts as EMI’s
in present years. Usually for homes bought in construction phase, you keep
paying small amounts of interest.
type of offer the lender gives money to the borrower and the purchase deed is
completed. The borrower becomes the owner of the house. Every month he has to
pay a small amount that is interest to the principle amount (loan amount).
During later years, asthe construction
progresses and the housing complex is readyhe has to pay the interest along with large sums of the principle
amount. This option may be good for individuals who are highly qualified and
have a new job and they know that over the years their salary is going to
increase with their experience. So they can pay smaller amounts in present
years and later on be prepared to pay larger sums to complete the loan
What are interest only home loans
Pay Interest Only Home Loans
, interest only home loans option mayalso be very risky as no one can predict about later years. The large
amounts of money as loans later on can be very difficult to pay back and one
may end up in financial tight spot. Some people also take this type of home
loan if they are confident about the price rise of their property. They can pay
the interest amount and later as the value of their house increases they can
sell this and make profit as well as pay the larger loan amount.
boon to many there are certain risks every individual has to take before going
in for an interest only home loan. Their job stability may not be guaranteed
over the years and only those individuals who are very confident about their
financial growth must go in for such type of loan. Also the property value may
drop or remain same so the individual may end up paying more than they actually
paid for the purchase of the flat some years back. This may result in financial
losses and also it may become difficult to sell the house during payments of
large amounts of loan.